There are many issues which have been discussed at great length with regards to the UK property market including Brexit, interest rates and overseas investors. Time and time again the doom and gloom merchants have been presenting “figures” which they believe show the UK property market is on the verge of a significant downturn. However, why is it that sensible long-term property investors are holding back this self-fulfilling prophecy?
If you strip out Brexit, interest rates and the supposed impact of overseas investors, the long-term outlook for the UK property market is still positive. As the UK looks set to leave the European Union there will be a reduction in immigration numbers but many people forget that the traditional immigration method will still be open to the European Union population as well as the rest of the world. The UK population will continue to grow for many years to come placing pressure on the property market, increasing rents and the value of property across the country.
The UK economy may well have a difficult period as the UK government continues to negotiate Brexit exit conditions. However, the UK economy is still one of the strongest in the world as is the UK property market.
Nobody is suggesting that Brexit will be easy for the UK economy and the UK property market but at the end of the day, money talks. Each time the UK property market seems set to take a lurch downwards, domestic and overseas investors emerge to take advantage of short-term price weakness. At the end of the day experts have their opinion and are more than happy to splash them over the Internet and the press, but it is investors who move markets. If investors decide the risk/reward ratio is unbalanced then they will sit on the sidelines until this position is rectified. Have they been sitting on the sidelines so far?
We have seen many self-fulfilling prophecies over the years but at this moment in time all of the doom and gloom criticism over Brexit has not created a self-fulfilling prophecy. This will surprise many people because all of the elements of a self-fulfilling prophecy are there so we can only assume it is the underlying strength of the UK economy and the UK property market which is stopping the country from falling into the abyss.
If you take a step back and look at the Brexit situation from a distance how would the German car market survive without a UK agreement, what would happen to the Spanish and Portuguese expat property markets and many people forget the UK has a trade deficit with the European Union. Leaders of the European Union obviously have a plan in place to weaken arguments in favour of the UK putting pen to paper on a trade deal with the single market. However, if the terms of any UK trade with the European Union make it more expensive, why would UK consumers continue to buy from the European Union?
So, while the short to medium term outlook for the UK property market may be a little mixed because of the Brexit situation, looking at the longer term picture it is not difficult to see why there is support from both domestic and overseas property investors.